Doing the Write Thing

Thanks to Jack Warkenthien for filling in on Friday while I was in the Land of Fruits and Nuts…You know, we tried to reason with those striking creative writers at the sitcoms, but to no avail…and now, the stagehand workers in New York are pouting, stalling production on 28-Broadway plays.

Global Media Intelligence, a research company, and Merrill Lynch have just completed a collaborative report on whether movies are really making money anymore, which might render the position of striking writers somewhat moot. But, as in all things American, it seems, the proof is not as much in the pudding as in the accounting.

An analysis of the report by the International Herald Tribune suggests the folks the writers might consider picketing would be the actors and directors, who’ve really pocketed the lion’s share of the money in the form of “participations:” a share in the gross revenue of a movie, not the profit.

It has been estimated that the film studios have paid out as much as 25% of film revenues in this manner. According to the Herald Tribune analysis, a “Hanks, Cruise or Carrey whose movie brings $600 million back to the studio from all sources might easily wind up with a $20 million salary, and an additional $50 million on the back end, while an A-list director and producer could take in tens of millions more.”

The effect is that those with such arrangements can end up with huge paydays, even on movies that are money-losers.

There are two things to keep in mind as you absorb this data:

Participations in studio projects are growing exponentially, as losses by the studios continue to mount.

“Total sales for last year's slate, the company figures, will ultimately be about $23.7 billion, down about 4.6 percent from 2004. Total costs, meanwhile, rose to $25.6 billion, up 13.2 percent,” according to the Trib’s reading of the numbers.

If the other studios are trying to keep up with the Jones’ (or the Disney’s), then it is estimated they are paying out shares worth $3 billion, while piling up an almost $2 billion loss on their new films.

The prickly point for the writers has been over residuals—the contractual payments writers receive when their work reappears in other media. The writers want this increased for future media appearances. The problem is, those residuals are paid after all of the accounting alchemy is performed…and after the actors and producers “get theirs” in participations payments.

If the A-listers are getting theirs before anyone else, and the films are still losing more and more moeny, there's not much left over in the first place--let alone room to increase the share of residuals paid. The Writers Guild of America West says movie residuals were just $121.3 million in 2006, a drop in that $3 billion bucket.

With a lucrative "first dollar gross" deal, however, one of these big stars can take home $70 million or more from a single hit.

While the writers are griping, the reality is that such profit negotiations are the result of willing buyers and willing sellers. Perhaps the best the writers can hope for is a diminishing of the will to operate with a two-tiered pay scale. After all, without the writers, some of these silver screen egg heads can't utter two intelligible sentances back to back.